It’s that time of year again. No, I’m not talking about spooky season. I’m talking about open enrollment!
I recently received an email from my company’s HR department, letting me know it’s time to select my benefits for the upcoming year. Now, I’ve been in the workforce for a decade, and I’m a wily old vet at this point, but I remember when I had to do this on my own the first time. I had a shit ton of questions!
I don’t want you to struggle the same way I did. So, being the nice guy I am, I figured I could impart some of my wisdom to you, my dear reader. If this is your first open enrollment, or you’ve experienced a qualifying event (I’ll explain what that means here in a second), don’t worry. I’m going to share with you everything I know about health insurance.
Now I’m not an insurance expert, but I have been forced to figure this stuff out because of my Crohn’s diagnosis, much like you probably will be. I’ve also spent seven years on teams building insurance software. Albeit dental insurance software, but many of the concepts do carry over. While I don’t pretend to know everything, I do have plenty of first-hand knowledge to share. This post won’t contain everything you might need to know about open enrollment and health insurance benefits. Still, it will get you going in the right direction.
One caveat, I’ll be coming at this from the perspective of getting insurance through your employer, in the good old U.S. of A. That’s all I’ve ever done, so that’s all I feel comfortable giving advice on. If you’re looking for information about getting insurance through a government-funded health exchange, check out Healthcare.gov.
So, what exactly is open enrollment?
In the health insurance world, open enrollment is the yearly period where you can enroll in an insurance plan. The exact time period can vary depending on who your plan sponsor is, but in my experience, it’s usually a two week period towards the end of the calendar year.
It’s essential to pay attention to deadlines. If you forget to enroll, you’re out of luck until the next open enrollment period. That is unless you have a qualifying event.
What the hell is a qualifying event?
A qualifying event is a significant, life-changing situation that the health insurance company deems a reasonable exception to the open enrollment rules. Some qualifying events include getting married or divorced, having a child, starting a new job, or turning 26. You’ll want to reach out to your HR department and insurance company for a full list. Because of the qualifying event, you’ll be eligible to enroll or change your insurance plan. Again, pay attention to deadlines because you’ll have a small window to make changes. For more information on qualifying events, check out this page from United Health Care.
Choosing the right plan for you
When it comes to insurance plans, some employers offerer their employees options while others offer only one plan. In the latter scenario, the choice is easy. You either take the insurance, or you don’t. I suggest you do, although there are plenty of scenarios where you’ll still need to weigh your options. Maybe you’re still eligible to be covered on your parent’s plan, or your spouse has better or more affordable coverage. If your employer offers more than one option, choosing the right plan for you can get complicated. Don’t worry, I’m here to help.
Types of Insurance Plans
Let’s start by getting to know the four main types of health insurance plans.
Health Maintenance Organization (HMO)
An HMO requires you to stay within a network of providers and facilities except for emergencies. If you visit a doctor or specialist outside the network, you’ll be responsible for the entirety of the bill. These plans generally come with the least amount of freedom to choose a doctor but also the lowest monthly premiums.
Exclusive Provider Organization (EPO)
Like an HMO, an EPO is an insurance plan that requires you to see in-network providers in all cases except for emergencies. The good news is these plans, while pricier than HMOs, come with lower monthly premiums and more options when it comes to choosing a doctor.
Preferred Provider Organization (PPO)
PPOs are generally the most expensive but also the most robust option. You’ll have the option to pay less if you choose an in-network provider or use an out of network provider for an additional cost. These plan’s networks are generally much more extensive.
Point of Service (POS)
A POS (no, not piece of shit) plan blends features of an HMO with a PPO. Like the PPO, you can choose in-network providers for a reduced cost but still be partially covered out of network. These plans can be tricky because you may need a referral or additional paperwork to see an out of network provider.
High Deductible Health Plan (HDHP)
You might hear your HR team calling something “the high deductible plan.” Your employer’s HDHP can be any of the plan types mentioned above, but it will typically have lower premiums. To account for that, you’ll have to pay more should you need to use your insurance. These plans also allow you to open a Health Savings Account (HSA) to help pay for health care costs. We’ll get to HSAs in a minute.
Key Terms
Now that you understand the alphabet soup that the HR department is throwing at you, let’s learn some key terms.
Premium
Simply put, this is the cost you pay each month for insurance. Your HR department might give you that dollar amount in a per paycheck, per week, or per month format. So be careful!
Deductible
A deductible is what you pay before the insurance company begins to pay its share. For example, if you have a $500 deductible, you’ll pay $500 before the insurance company starts chipping in. However, plans usually cover preventative care before the deductible is met.
Copay
The copay is what you owe each time you receive certain types of care. For example, you might have a $20 copay to see a primary care doctor and a $45 copay to see a specialist. Not all services have a copay.
Coinsurance
After you’ve paid your deductible for the year, you’re not off the hook when it comes to medical bills. This is where coinsurance comes in. Coinsurance is the percentage you pay for services after your deductible has been met. Let’s say you’ve met your deductible for the year. Your GI doctor orders some diagnostic lab work, and it costs $1,000. If you have a coinsurance of 20%, you’ll pay $200.
Out of Pocket Maximum
This is the total you’ll pay for health care within a plan year. Once you meet your out of pocket max, all health care will be covered at 100%. However, this does not include your premiums. You’ll still have to pay that to be enrolled in the plan.
Health Savings Account (HSA)
I told you I’d get back to HSAs! A health savings account is a particular bank account you can create when you enroll in an HDHP. You can allocate pre-tax money into your HSA from each paycheck. You can withdraw from this account to pay for qualified medical costs. This is your money, so you can take this account with you if you leave your employer.
Flexible Spending Account (FSA)
A flexible spending account allows you to pay for out of pocket medical costs with tax-free dollars. During open enrollment, you tell your employer how much money you would like to use for the next year. That money is put into an account for you, then throughout the year, pre-tax money will be deducted from your paycheck. You can use this money throughout the year to pay for medical expenses. One caveat is if you don’t use the funds within the year, you lose the money.
Evaluating your options
I always cringe when someone tells me they have “REALLY good health insurance.” Really good insurance is completely subjective based on what the individual values. With all this new lingo, you should now be able to evaluate the options your employer is giving you based on your health needs. Health insurance plans come in all shapes and sizes. If you know you’ll have health care costs, you probably value a plan with higher monthly premiums and lower out-of-pocket costs. Conversely, if you’re a healthy person, you might value lower monthly premiums and feel okay with the risk of paying an arm and a leg if you get sick.
When I evaluate a plan, I always start with the out of pocket max. I have Crohn’s Disease, so I know I’ll have health care costs every year. Knowing the maximum amount I could spend in a year helps me budget. In fact, next week, I’m going to write about how I gammed the system to my advantage.
Time to Make Your Choice
It’s important to do a little inventory on your health. How are you feeling? Are you in remission, or do you feel a flare coming? Do you take a biologic to keep yourself in remission? Are you planning on having surgery? These are some good questions to ask yourself as you pick your plan.
Luckily, I’ve never worked anywhere that made the decision too difficult. It usually comes down to the premium PPO, a HDHP, and maybe something in between.
Don’t worry, you got this!